Ukrzaliznytsia bonds dropped following a request for a payment deferment.

OAO "Ukrzaliznytsia" has decided to capitalize approximately $160 million in accrued interest on eurobonds and has requested bondholders to postpone payment for another year. This is reported by Interfax-Ukraine.

The company has started collecting consent for the restructuring of interest payments on both bonds, which are due for payment in January and July of the next year.

In particular, for eurobonds worth $594.9 million maturing on July 9, 2026, with a rate of 8.25%, interest amounting to $108.28 million will be capitalized, increasing the total volume of this issue to $703.18 million. Meanwhile, for eurobonds worth $300 million maturing on July 15, 2028, with a rate of 7.875%, interest of $51.9 million will be capitalized, raising the issue to $351.9 million.

UZ explained that inflation and rising prices for electricity and diesel fuel are putting pressure on liquidity. The company also announced plans to increase freight tariffs by 37%, which have not been raised in two and a half years.

In justifying its proposal, UZ notes that Ukraine continues to repel armed aggression from the Russian Federation, which targets vital civilian and industrial infrastructure, particularly intensifying strikes on the energy system. This leads to further deterioration of the company's business, operational results, financial condition, and prospects, including forecasts regarding expected indicators in 2025 and beyond.

Following the request for payment deferral, dollar bonds issued by UZ dropped, writes Bloomberg.

According to the agency, the 2026 bonds fell nearly 6 cents to 82 cents on the dollar, marking the largest one-day decline since June 2023, while the company's 2028 bonds also decreased by 0.87 cents to 77 cents.

The company will hold a meeting with investors on December 18, and voting on the deferral of payments is scheduled for December 27.